How Do I Incorporate My Business into My Estate Planning? – Annapolis and Towson Estate Planning

When people think about estate planning, many just think about their personal property and their children’s future. If you have a successful business, you may want to think about having it continue after you retire or pass away.

Forbes’ recent article entitled “Why Business Owners Should Think About Estate Planning Sooner Than Later” says that many business owners believe that estate planning and getting their affairs in order happens when they are older. While that’s true for the most part, it is only because that is the stage of life when many people begin pondering their mortality and worrying about what will happen next or what will happen when they are gone. The day-to-day concerns and running of a business is also more than enough to worry about, let alone adding one’s mortality to the worry list at the earlier stages in your life.

Business continuity is the biggest concern for entrepreneurs. This can be a touchy subject, both personally and professionally, so it is better to have this addressed while you are in charge, rather than leaving the company’s future in the hands of others who are emotionally invested in you or in your work. One option is to create a living trust and will to put in place parameters that a trustee can carry out. With these names and decisions in place, you will avoid a lot of stress and conflict for those you leave behind.

Let them be upset with you, rather than with each other. This will give them a higher probability of working things out amicably at your death. The smart move is to create a business succession plan that names successor trustees to be in charge of operating the business, if you become incapacitated or die.

A power of attorney document will nominate a fiduciary agent to act on your behalf, if you become incapacitated, but you should also ask your estate planning attorney about creating a trust to provide for the seamless transition of your business at your death to your successor trustees. The transfer of the company to your trust will avoid the hassle of probate and will ensure that your business assets are passed on to your chosen beneficiaries. Timely planning will also preserve your business assets, as advanced tax planning strategies might be implemented to establish specific trusts to minimize the estate tax.

Estate planning may not be on tomorrow’s to do list for young entrepreneurs and business owners. Nonetheless, it is vital to plan for all that life may bring.

Reference: Forbes (Dec. 30, 2019) “Why Business Owners Should Think About Estate Planning Sooner Than Later”

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Creating an Estate Plan Should Be a New Year’s Resolution – Annapolis and Towson Estate Planning

Many people think of estate planning as a way to save on taxes as their hard-earned assets are passed from one generation to the next. That is certainly a part of estate planning, but there are many other aspects of estate planning that focus on protecting the person and their family. They are detailed in the article “An estate planning checklist should be a top New Year’s resolution” from the Houston Business Journal.

Now is a good time to start the new year off right to put an estate plan in place. For those who have an estate plan, it is a good time to revisit living documents that need to be updated to reflect changes in a person’s life, family dynamics, changes in exemption limits and the recently passed SECURE Act.

Here are the top four items to make sure that your estate plan is ready for 2020.

Take a look at your financial situation. No matter how modest or massive your assets, just about everyone has an estate that is worth protecting. Most people have something they want to pass along to their children or grandchildren. An estate plan simply formalizes these wishes and minimizes the chances that the family will fight over how assets are distributed.

Many people meet with their team at least once a year to get a clear picture of their financial status. This allows the estate planning attorney to review any changes that may impact how the estate is structured, including tailoring gifting strategies to reduce the tax burden.

Put your wishes on paper, and your affairs in order. Without a will, there is no way for anyone to know what your wishes are and how you would want your assets passed to others. A will spells out who gets what and avoids having the estate administered by state laws. A living will is also needed to establish medical power of attorney and state wishes about life support and what medical care you may or may not want to receive. That can include everything from blood transfusions, palliative care, diagnostic tests or the use of a respirator. A financial POA is needed to give someone the legal authority to make decisions on your behalf, if you become incapacitated.

With these estate planning documents, you relieve family members of the burden of guessing what you might have wanted, especially during emergency situations when emotions are running high.

Asset estate and gift tax exemptions for 2020. The exemption for 2020 has increased to $1.58 million. This eliminates federal estate taxes on amounts under that limit that are gifted to family members during a person’s lifetime or left to them upon a person’s death. This is a significant increase from prior years. In 1997, the exemption was $600,000. It rose to $5.49 million in 2018, and as a result of the Tax Cuts and Jobs Act, was $11.4 million in 2019.

Understand the “claw back.” The exemption amount will increase every year until 2025. There was some uncertainty about what would happen if someone uses their $11.58 million exemption in 2020 and then dies in 2026, when the number could revert back to the $5 million range. Would the IRS say that the person used more of their exemption than they were entitled to? The agency recently issued final regulations that will protect individuals who take advantage of these exemption limits through 2025. Gifts will be sheltered by the increasing exemption limits when the gifts are actually made.

Continuing changes in the tax laws are examples of why an annual review of an estate plan is necessary. The one thing we can all be certain of is change, and keeping estate plans up to date makes sure that the family benefits from all available changes to the law.

Reference: Houston Business Journal (Jan. 1, 2020) “An estate planning checklist should be a top New Year’s resolution”

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Failure to Act on a Will Can Lead to a Loss of an Estate – Annapolis and Towson Estate Planning

Here’s a cautionary tale for family members who don’t know what to do when a parent or uncle dies. A man and his sister have an uncle, let’s call him George, who has no children. Uncle George had two siblings—the father of the man and his sister (who died before Uncle George made out his will)—and a brother. Let’s call the brother Jim. Uncle Jim lived in Uncle George’s house. Uncle George died, and the siblings didn’t do anything.

Five years went by, and the siblings decided they wanted to sell the house to pay off some loans. When they told Uncle George their plans, he announced that he would not leave the house. As explained in the article “Wills are not self-enacting” from mySanAntonio.com, the nephew and niece have overlooked more than a few salient details.

The most important fact: wills are not self-enacting. Next, there is a legal time limit upon which an executor or an heir must take legal action and finally, state law for each state has a default inheritance plan, when there is no will in the public record after someone has died.

What does it mean for a will to not be “self-enacting”? While Uncle George may have had a will with instructions to leave his house to the siblings, they did not do anything to probate the will. The only people who knew about the will were the uncle, the attorney who prepared the will and maybe a few other family members. When a home is bought and sold, the transaction must be recorded in the county’s public records to inform the public of the change of ownership.

Not taking action on a will is a disservice to the decedent and their heirs. The will needs to go through probate, for the will to be deemed valid by the court and to allow the named executor to distribute assets, according to the terms of the will.

There are legal limits to when the will must be presented to the courts. A local estate planning attorney will know what those limits are, as they are different in each state. In Texas, where this took place, the will must be filed for probate within four years of the date that the will’s maker passed. After four years, the court is not allowed to appoint the named executor. The court may not recognize the will either, unless those who are late in presenting the will can explain the delay, the heirs agree that the will can be recognized and the will is limited to passing title to the named devisees.

Every state has a plan for how assets are distributed in the absence of a will. When the owner of something dies, the ownership passes to someone else. When there is no will, heirs-at-law receive the property. Each state has a statute that determines who the heirs are.

In this case, the will was not timely probated, so the law defaults to giving ownership to the heirs-at-law. In Texas, when there is no surviving spouse and no descendants, the siblings of the deceased person are the heirs-at-law. That would be Uncle George, since the nephew and niece failed to file the will for probate in a timely manner.

When a family member passes, someone in the family must take steps to ensure that the will is probated, and the estate is properly settled. Failing to do so cost this brother and sister the inheritance that their uncle wanted them to have. Had they contacted a qualified estate planning attorney, the entire process would have been handled correctly, and they would have had ownership of their uncle’s home.

Reference: mySanAntonio.com (Dec. 23, 2019) “Wills are not self-enacting”

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Why a Will Is the Foundation of an Estate Plan – Annapolis and Towson Estate Planning

An estate planning lawyer has many different tools to achieve clients’ estate planning goals. However, at the heart of any plan is the will, also known as the “last will and testament.” Even people who are young or who have modest levels of assets should have a will—one that is legally valid and up to date. For parents of young children, this is especially important, says the article “Wills: The Cornerstone of Your Estate Plan” from the Sparta Independent. Why? Because in most states, a will is the only way that parents can name guardians for their children.

Having a will means that your estate will avoid being “intestate,” that is, having your assets distributed according to the laws of your state. With a will, you get to determine who is to receive your property. That includes your home, car, bank and investment accounts and any other assets, including those with sentimental value.

Without a will, your property will be distributed to your closest blood relatives, depending upon how closely related they are to you. Few individuals want to have the state making these decisions for their property. Most people would rather make these decisions for themselves.

Property can be left to anyone you choose—including a spouse, children, charities, a trust, other relatives, a college or university, or anyone you want. There are some limits imposed by law that you should know about: a spouse has certain rights to your property, and they cannot be reversed based on your will.

For parents of young children, the will is used to name a legal guardian for children. A personal guardian, who takes personal custody of the children, can be named, as well as a property guardian, who is in charge of the children’s assets. This can be the same person, but is often two different people. You may also want to ask your estate planning attorney about using trusts to fund children’s college educations.

The will is also a means of naming an executor. This is the person who acts as your legal representative after your death. This person will be in charge of carrying out all of your estate settlement tasks, so they need to be someone you trust, who is skilled with managing property and the many tasks that go into settling an estate. The executor must be approved by the probate court, before they can start taking action for you.

There are also taxes and expenses that need to be managed. Unless the will provides directions, these are determined by state law. To be sure that gifts you wanted to give to family and loved ones are not consumed by taxes, the will needs to indicate that taxes and expenses are to be paid from the residuary estate.

A will can be used to create a “testamentary trust,” which comes into existence when your will is probated. It has a trustee, beneficiaries and directions on how distributions should be made. The use of trusts is especially important, if you have young children who are not able to manage assets or property.

Note that any assets distributed through a will are subject to probate, the court-supervised process of administering and proving a will. Probate can be costly and time-consuming, and the records are available to the public, which means anyone can see them. Many people chose to distribute their assets through trusts to avoid having large assets pass through probate.

Talk with an experienced estate planning attorney about creating a will and the many different functions that the will plays in settling your estate. You’ll also want to explore planning for incapacity, which includes having a Power of Attorney, Health Care Proxy, and Medical Directives. Estate planning attorneys also work on tax issues to minimize the taxes paid by the estate.

Reference: Sparta Independent (Dec. 19, 2019) “Wills: The Cornerstone of Your Estate Plan”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

What Do I Need to Do for Estate Planning if I’m a “Solo Ager”? – Annapolis and Towson Estate Planning

A 60-something single person is part of a group that is sometimes known as “Solo Agers.” There’s more to estate planning for these people than they may realize.

According to the American Society on Aging, about 20% of Boomers fall into this category. From a retirement planning viewpoint, this means there are a few specific areas a solo ager should focus on to help make sure he’s set in retirement.

Cincinnati.com’s recent article, “Retirement planning must-dos for ‘solo agers,’” says first, solo agers should review their support system to make sure they have strong, healthy relationships outside of work. Although a solo ager may not have adult children who can provide care when the time comes, they should consider other family, such as younger siblings, nieces or nephews, and if not, perhaps a younger, trusted friend.

This support system coincides with a solo ager’s finances and estate planning needs. Every adult should have a power of attorney for both healthcare and finances. In these legal documents, you name a trusted person to make healthcare and financial decisions on your behalf, respectively, if you are no longer able to do so on your own. It doesn’t have to be the same person, but it can be. As a solo ager, it’s critical that you determine what your legal guardianship looks like in the future.

Solo agers also need to think about their home. While most people would prefer to age-in-place, think about whether this is going to be feasible, especially if you don’t have an adult child to provide care.

One option is to hire an in-home aide, if you can afford it. There are also several kinds of retirement communities from which to choose, such as assisted living and independent living. There are even now some communities that promote “co-housing,” just like the Golden Girls.

As you near retirement, it’s extremely important as a solo ager that you begin to consider who to trust with your personal directives and assets. Speak to an estate planning attorney to draft the proper legal documents.

Reference: Cincinnati.com (December 18, 2019) “Retirement planning must-dos for ‘solo agers’”

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Start the New Year with Estate Planning To-Do’s – Annapolis and Towson Estate Planning

Families who wish their loved ones had not created an estate plan are far and few between. However, the number of families who have had to experience extra pain, unnecessary expenses and even family battles because of a lack of estate planning are many. While there are a number of aspects to an estate plan that take some time to accomplish, The Daily Sentinel recommends that readers tackle these tasks in the article “Consider These Items As Part of Your Year-End Plan.”

Review and update any beneficiary designations. This is one of the simplest parts of any estate plan to fix. Most people think that what’s in their will controls how all of their assets are distributed, but this is not true. Accounts with beneficiary designations—like life insurance policies, retirement accounts, and some bank accounts—are controlled by the beneficiary designation and not the will.

Proceeds from these assets are based on the instructions you have given to the institution, and not what your will or a trust directs. This is also true for real estate that is held in JTWROS (Joint Tenancy with Right of Survivorship) and any real property transferred through the use of a beneficiary deed. The start of a new year is the time to make sure that any assets with a beneficiary designation are aligned with your estate plan.

Take some time to speak with the people you have named as your agent, personal representative or successor trustee. These people will be managing all or a portion of your estate. Make sure they remember that they agreed to take on this responsibility. Make sure they have a copy of any relevant documents and ask if they have any questions.

Locate your original estate planning documents. When was the last time they were reviewed? New laws, and most recently the SECURE Act, may require a revision of many wills, especially if you own a large IRA. You’ll also want to let your executor know where your original will can be found. The probate court, which will review your will, prefers an original. A will can be probated without the original, but there will be more costs involved and it may require a few additional steps. Your will should be kept in a secure, fire and water-safe location. If you keep copies at home, make a note on the document as to where the original can be found.

Create an inventory of your online accounts and login data for each one. Most people open a new account practically every month, so keep track. That should include email, personal photos, social media and any financial accounts. This information also needs to be stored in a safe place. Your estate planning document file would be the logical place for this information but remember to update it when changing any information, like your password.

If you have a medical power of attorney and advance directive, ask your primary care physician if they have a means of keeping these documents, and explain how you wish the instructions on the documents to be carried out. If you don’t have these documents, make them part of your estate plan review process.

A cover letter to your executor and family that contains complete contact information for the various professionals—legal, financial, and medical—will be a help in the case of an unexpected event.

Remember that life is always changing, and the same estate plan that worked so well ten years ago, may be out of date now. Speak with an experienced estate planning attorney in your state who can help you create a plan to protect yourself and your loved ones.

Reference: The Daily Sentinel (Dec. 28, 2019) “Consider These Items As Part of Your Year-End Plan”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How Does the SECURE Act Change Your Estate Plan? – Annapolis and Towson Estate Planning

The SECURE Act has made big changes to how IRA distributions occur after death. Anyone who owns an IRA, regardless of its size, needs to examine their retirement savings plan and their estate plan to see how these changes will have an impact. The article “SECURE Act New IRA Rules: Change Your Estate Plan” from Forbes explains what the changes are and the steps that need be taken.

Some of the changes include revising wills and trusts which include provisions creating conduit trusts that had been created to hold IRAs and preserve the stretch IRA benefit, while the IRA plan owner was still alive.

Existing conduit trusts may need to be modified before the owner’s death to address how the SECURE Act might undermine the intent of the trust.

Rethinking and possibly completely restructuring the planning for the IRA account may need to occur. This may mean making a charity the beneficiary of the account, and possibly using life insurance or other planning strategies to create a replacement for the value of the charitable donation.

Another alternative may be to pay the IRA balance to a Charitable Remainder Trust (CRT) on death that will stretch out the distributions to the beneficiary of the CRT over that beneficiary’s lifetime under the CRT rules. Paired with a life insurance trust, this might replace the assets that will ultimately pass to the charity under the CRT rules.

The biggest change in the SECURE Act being examined by estate planning and tax planning attorneys is the loss of the “stretch” IRA for beneficiaries inheriting IRAs after 2019. Most beneficiaries who inherit an IRA after 2019 will be required to completely withdraw all plan assets within ten years of the date of death.

One result of the change of this law will be to generate tax revenues. In the past, the ability to stretch an IRA out over many years, even decades, allowed families to pass wealth across generations with minimal taxes, while the IRAs continued to grow tax tree.

Another interesting change: No withdrawals need be made during that ten-year period, if that is the beneficiary’s wish. However, at the ten-year mark, ALL assets must be withdrawn, and taxes paid.

Under the prior law, the period in which the IRA assets needed to be distributed was based on whether the plan owner died before or after the RMD and the age of the beneficiary.

The deferral of withdrawals and income tax benefits encouraged many IRA owners to bequeath a large IRA balance completely to their heirs. Others, with larger IRAs, used a conduit trust to flow the RMDs to the beneficiary and protect the balance of the plan.

There are exceptions to the 10-year SECURE Act payout rule. Certain “eligible designated beneficiaries” are not required to follow the ten-year rule. They include the surviving spouse, chronically ill heirs and disabled heirs. Minor children are also considered eligible beneficiaries, but when they become legal adults, the ten year distribution rule applies to them. Therefore, by age 28 (ten years after attaining legal majority), they must take all assets from the IRA and pay the taxes as applicable.

The new law and its ramifications are under intense scrutiny by members of the estate planning and elder law bar because of these and other changes. Speak with your estate planning attorney to review your estate plan to ensure that your goals will be achieved in light of these changes.

Reference: Forbes (Dec. 25, 2019) “SECURE Act New IRA Rules: Change Your Estate Plan”

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Is There Estate Tax on the Property I Inherited? – Annapolis and Towson Estate Planning

The vast majority of those who inherit real estate don’t end up paying any taxes on the property. However, there are some instances where estate or inheritance taxes could be assessed on inherited real estate. Motley Fool’s recent article, “Do You Have to Pay Estate Tax on Real Estate You Inherit?” provides a rundown of how estate taxes work in the U.S. and what it means to you if you inherit or are gifted real estate assets.

An estate tax is a tax applied on property transfers at death. A gift tax is a tax levied on property transfers while both parties are alive. An inheritance tax is assessed on the individual who inherits the property. For real estate purposes, you should also know that this includes money and property, and real estate is valued based on the fair market value at the time of the decedent’s death.

Most Americans don’t have to worry about estate taxes because we’re allowed to exclude a certain amount of assets from our taxable estates, which is called the lifetime exemption. This amount is adjusted for inflation over time and is $11.58 million per person for 2020. Note that estate taxes aren’t paid by people who inherit the property but are paid directly by the estate before it is distributed to the heirs.

The estate and gift taxes in the U.S. are part of a unified system. The IRS allows an annual exclusion amount that exempts many gifts from any potential transfer tax taxation. In 2020, it’s $15,000 per donor, per recipient. Although money (or assets) exceeding this amount in a given year is reported as a taxable gift, doesn’t mean you’ll need to pay tax on them. However, taxable gifts do accumulate from year to year and count toward your lifetime exclusion. If you passed away in 2020, your lifetime exclusion will be $11.58 million for estate tax purposes.

If you’d given $3 million in taxable gifts during your lifetime, you’ll only be able to exclude $8.58 million of your assets from estate taxation. You’d only be required to pay any gift taxes while you’re alive, if you use up your entire lifetime exemption. If you have given away $11 million prior to 2020 and you give away another $1 million, it would trigger a taxable gift to the extent that your new gift exceeds the $11.58 million threshold.

There are a few special rules to understand, such as the fact that you can give any amount to your spouse in most cases, without any gift or estate tax. Any amount given to charity is also free of gift tax and doesn’t count toward your lifetime exemption. Higher education expenses are free of gift and estate tax consequences provided the payment is made directly to the school. Medical expense payments are free of gift and estate tax consequences, if the payment is made directly to the health care provider.

Remember that some states also have their own estate and/or inheritance taxes that you might need to consider.

States that have an estate tax include Connecticut, Illinois, Maine, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington. The states with an inheritance tax are Iowa, Kentucky, Nebraska, New Jersey and Pennsylvania. Maryland has both an estate and an inheritance tax. However, there are very few situations when you would personally have to pay tax on inherited real estate.

Estate tax can be a complex issue, so speak with a qualified estate planning attorney.

Reference: Motley Fool (December 11, 2019) “Do You Have to Pay Estate Tax on Real Estate You Inherit?”

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What Should I Know About Being an Executor? – Annapolis and Towson Estate Planning

You’re named executor because someone thinks you’d be good at collecting assets, settling debts, filing estate tax returns where necessary, distributing assets and closing the estate.

However, Investopedia’s article from last summer, “5 Surprising Hazards of Being an Executor,” explains that the person named as an executor isn’t required to accept the appointment. Prior to agreeing to act as an executor, you should know some of the hazards that can result, as well as how you can address some of these potential issues, so that being an executor can run smoothly.

  1. Conflicts with Co-Executors. Parents will frequently name more than one adult child as co-executor, so they don’t show favoritism. However, for those who are named, this may not work well because some children may live far way, making it difficult to coordinate the hands-on activities, like securing assets and selling a home. Some adult children may also not have the financial ability to deal with creditors, understand estate tax matters and perform effective accounting to satisfy beneficiaries that things have been properly handled. In addition, multiple executors mean additional paperwork. Instead, see if co-executors can agree to allow only one to serve, and the others will waive their appointment. Another option is for all of the children to decline and allow a bank’s trust department to handle the task. Employing a bank to serve instead of an individual as executor can alleviate conflicts among the children and relieves them from what could be a very difficult job.
  2. Conflicts with Heirs. It’s an executor’s job to gather the estate assets and distribute them according to the deceased person’s wishes. In some cases, heirs will land on a decedent’s home even before the funeral, taking mementos, heirlooms and other valuables. It’s best to secure the home and other assets as quickly as possible. Tell the heirs that this is the law and share information about the decedent’s wishes, which may be described in a will or listed in a separate document. This Letter of Last Instruction isn’t binding on the executor but can be a good guide for asset disbursements.
  3. Time-Consuming Responsibilities. One of the major drawbacks to be an executor is the amount of time it takes to handle responsibilities. For example, imagine the time involved in contacting various government agencies. This can include the Social Security Administration to stop Social Security benefits and, in the case of a surviving spouse, claim the $255 death benefit. However, an executor can permit an estate attorney to handle many of these matters.
  4. Personal Liability Exposure. The executor must pay taxes owed, before disbursing inheritances to heirs. However, if you pay heirs first and don’t have enough funds in the estate’s checking account to pay taxes, you’re personally liable for the taxes. Explain to heirs who are chomping at the bit to receive their inheritances that you’re not allowed to give them their share, until you’ve settled with creditors, the IRS and others with a claim against the estate. You should also be sure that you understand the extent of the funds needed to pay what’s owed.
  5. Out-of-Pocket Expenses. An executor can receive a commission for handling his duties. The amount of the commission is typically determined by the size of the estate (e.g., a percentage of assets). However, with many cases, particularly smaller estates and among families, an executor may waive any commission. You should pay the expenses of the estate from an estate checking account and record all out-of-pocket expenses, because some of these expenses may be reimbursable by the estate.

Being an executor can be a challenge, but somebody must do it. If that person’s you, be sure to know what you’re getting into before you agree to act as an executor.

Reference: Investopedia (June 25, 2019) “5 Surprising Hazards of Being an Executor”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

How Do I Plan for My Incapacity? – Annapolis and Towson Estate Planning

The Post-Searchlight’s recent article, “How to go about planning for incapacity,” advises that planning ahead can make certain that your health-care wishes will be carried out, and that your finances will continue to be competently managed.

Incapacity can strike at any time. Advancing age can bring dementia and Alzheimer’s disease, and a serious illness or accident can happen suddenly. Therefore, it’s a real possibility that you or your spouse could become unable to handle your own medical or financial affairs.

If you become incapacitated without the proper plans and documentation in place, a relative or friend will have to petition the court to appoint a guardian for you. This is a public procedure that can be stressful, time consuming and costly. In addition, without your directions, a guardian might not make the decisions you would have made.

Advance medical directives. Without any legal documents that state your wishes, healthcare providers are obligated to prolong your life using artificial means, if necessary, even if you really don’t want this. To avoid this happening to you, sign an advance medical directive. There are three types of advance medical directives: a living will, a durable power of attorney for health care (or health-care proxy) and a Do Not Resuscitate order (DNR). Each of these documents has its own purpose, benefits and drawbacks, and may not be effective in some states. Employ an experienced estate planning attorney to prepare your medical directives to make certain that you have the ones you’ll need and that all documents are consistent.

Living will. This document lets you stipulate the types of medical care you want to receive, despite the fact that you will die as a result of the choice. Check with an estate planning attorney about how living wills are used in your state.

Durable power of attorney for health care. Also called a “health-care proxy,” this document lets you designate a representative to make medical decisions on your behalf.

Do Not Resuscitate order (DNR). This is a physician’s order that tells all other medical staff not to perform CPR, if you go into cardiac arrest. There are two types of DNRs: (i) a DNR that’s only effective while you are hospitalized; and (ii) and DNR that’s used while you’re outside the hospital.

Durable power of attorney (DPOA). This document lets you to name an individual to act on your behalf. There are two types of DPOA: (i) an immediate DPOA. This document is effective immediately; and (ii) a springing DPOA, which isn’t effective until you’ve become incapacitated. Both types end at your death. Note that a springing DPOA isn’t legal in some states, so check with an estate planning attorney.

Incapacity can be determined by (i) physician certification where you can include a provision in a durable power of attorney naming one or more doctors to make the determination, or you can state that your incapacity will be determined by your attending physician at the relevant time; and (ii) judicial finding where a judge is petitioned to determine incapacity where a hearing is held where medical and other testimony will be heard.

Reference: The Post-Searchlight (December 13, 2019) “How to go about planning for incapacity”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys